Tackling roadblocks

The duty structure in India is considered to be the highest in the world; and this has been one of the major factors restricting the entry of foreign brands. India's political division into 29 states, each with a different tax system, also impedes the smooth transport of goods as each frontier levies its own set of export and import taxes. Says Roy, "The duty structure has affected our pricing strategy. The entry price point for the womenswear market is a hindrance, too, because of the extremely high custom duty.

“But things are looking up slightly, and we are hoping to have duties being reduced by 30-40 per cent about five years down the line. Presently, our pricing in India is 20 per cent less than that in other countries. ”

There is no dearth of foreign players in the segment eager to enter India, but finding the right location is always a challenge. Says Franchini, Bally Group, “Lack of quality retail space, especially for luxury brands like Bally, does become a hindrance to expansion plans. Mumbai still does not have a speciality mall for premium/luxury brands. However, India being a new market for the luxury segment, we are sure that the situation will improve in the next few years. Good infrastructure is also a problem.”

Since these brands do not have their manufacture bases in India, the issue of continuous replenishment also causes a problem – though the majority of these brands maintain that they have systems in place to take care of such issues. Shares Walker, Nine West International, “To take care of such requirements, there is a constant shipment of products every 7 to 10 days. For urgent requirements, replenishments are sent by air to meet customer needs.”

Current market overview
Footwear retail registered a growth of 9.2 per cent in 2006 and stood at Rs 11,900 crore at 2003-04 constant prices, as against Rs 10,900 crore in 2005 and Rs 10,000 crore the previous year. The branded organised segment grew much faster at year-on-year rate of 34.2 per cent during 2005-06, and was estimated at Rs 4,500 crore in 2006. Men's footwear comprises the largest share of the organised market, accounting for about 52 per cent in value terms. The women's footwear segment still remains the most untapped segment, with nearly 80-90 per cent of purchases taking place in the unorganised market. This is largely due to the dressing habits of women, for whom considerations of durability or comfort are less important than coordinated colours and designs.

Commenting on the demand for foreign footwear in the country, a spokesperson from footwear chain The Loft remarks, “The demand for foreign footwear is only among top-end consumers since these are sold through a few exclusive shops. Because of their high price points, these are not preferred by shoppers of all classes. Product awareness of these high-fashion brands is also inadequate.” Talking about the highest-selling foreign footwear brand at The Loft, he informs, “Florsheim is the largest-selling foreign footwear brand in The Loft currently.”

India is fast emerging as an important fashion centre on the global map; and the potential of the Indian footwear market is evident from the presence of a range of international high-fashion brands, which are now ready to embark on expansion plans.

The Indian footwear market has just recently seen a demand shift from low-priced footwear to medium- and high-priced products – with this demand potential remaining unexplored to a large degree. In a country with a population of over one billion, the magnitude of the market is unimaginable, even if a third of the population buys a pair each! It is exactly this market size that has resulted in almost every national and international brand focusing on the domestic Indian market.